101. The journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is
A. debit Interest Expense, credit Cash and Premium on Bonds Payable
B. debit Interest Expense, credit Cash
C. debit Interest Expense and Premium on Bonds Payable, credit Cash
D. debit Interest Expense, credit Interest Payable and Premium on Bonds Payable
102. On January 1, 2007, the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2011. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2007, is
A. $4,000
B. $4,200
C. $5,400
D. $5,800
103. If $1,000,000 of 8% bonds are issued at 105, the amount of cash received from the sale is
A. $1,080,000
B. $950,000
C. $1,000,000
D. $1,050,000
104. If the market rate of interest is greater than the contractual rate of interest, bonds will sell
A. at a premium.
B. at face value.
C. at a discount.
D. only after the stated rate of interest is increased.
105. The interest expense recorded on an interest payment date is increased
A. only if the market rate of interest is less than the stated rate of interest on that date.
B. by the amortization of premium on bonds payable.
C. by the amortization of discount on bonds payable.
D. only if the bonds were sold at face value.
106. On January 1, 2009, $1,000,000, 5-year, 10% bonds, were issued for $960,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the semiannual amortization amount is
A. $8,000.
B. $6,000.
C. $4,000
D. $5,000
107. If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount
A. less than face value.
B. equal to the face value.
C. greater than face value.
D. that cannot be determined.
108. A corporation issues $100,000, 10%, 5-year bonds on January 1, 2009, for $104,200. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2009, is
A. $10,420.
B. $5,420.
C. $5,000.
D. $4,580.
109. If bonds are issued at a premium, the stated interest rate is
A. higher than the market rate of interest.
B. lower than the market rate of interest.
C. too low to attract investors.
D. adjusted to a higher rate of interest.
110. The Victor Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2009, at 96. The journal entry to record the issuance will show a
A. debit to Cash of $1,000,000.
B. credit to Discount on Bonds Payable for $40,000.
C. credit to Bonds Payable for $960,000.
D. debit to Cash for $960,000.